Exhibit 99.1
CORRECTING and REPLACING Serena
Software Reports Second Quarter Fiscal 2006 Results; GAAP EPS of
$0.18; Non-GAAP EPS of $0.32; $32 Million Cash Flow From Operations
SAN MATEO, Calif.--(BUSINESS WIRE)--Aug. 18, 2005--In BW5629
issued Aug. 18, 2005: In the Condensed Consolidated Balance Sheets
financial table, the Total Stockholders' Equity in the column with the
heading July 31, 2005, should read: 274,723 (sted: 274,273).
The corrected release reads as follows:
SERENA SOFTWARE REPORTS SECOND QUARTER FISCAL 2006 RESULTS; GAAP
EPS OF $0.18; NON-GAAP EPS OF $0.32; $32 MILLION CASH FLOW FROM
OPERATIONS
Serena Software (NASDAQ: SRNA), the largest company solely focused
on managing change in the IT environment, announced today results for
the second quarter ending July 31, 2005.
Total revenue was $59.4 million in the second quarter of fiscal
2006 and represented a 14% increase over the second quarter of fiscal
2005. Software license revenue was $18.8 million, maintenance revenue
increased to $34.2 million, up 33% year over year and service revenues
were $6.4 million for the second quarter of fiscal 2006. License
revenue for the second quarter from software change management was 86%
of total license revenue and 64% of total license revenue came from
distributed systems platforms.
Net income and net income per fully-diluted share computed in
accordance with generally accepted accounting principles ("GAAP") for
the second quarter of fiscal 2006 increased to $8.5 million and $0.18
from $0.3 million and $0.01 in the same quarter a year ago.
Non-GAAP net income and net income per diluted share for the
second quarter of fiscal 2006 increased 24% and 33%, respectively, to
$16.5 million and $0.32 from $13.3 million and $0.24 in the second
quarter of fiscal 2005.
Non-GAAP net income and net income per share exclude amortization
of intangible assets and charges relating to the purchase accounting
adjustments for the acquisition of Merant, stock-based compensation,
amortization of acquired technology and other intangible assets,
restructuring, acquisition and other charges, and acquired in-process
research and development. For periods prior to the second quarter,
reported non-GAAP net income and net income per share also exclude the
revenue impact of the deferred maintenance write-down to fair value. A
reconciliation of non-GAAP to GAAP financial results is included in
this press release.
Total cash and equivalents, restricted cash and investments as of
July 31, 2005 was $186 million and cash flow from operations for the
second quarter was $32 million. Total deferred revenue was $79.8
million. Days sales outstanding in the second fiscal quarter were 45
days, representing a 24 day sequential improvement from 69 days in the
prior quarter. The Company repurchased 0.7 million shares of its
common stock in the open market during the second quarter of fiscal
2006 for an aggregate price of $14.2 million.
"I am pleased we achieved the preliminary results we announced
earlier this month, including delivering non-GAAP earnings per share
within our original guidance," said Mark Woodward, President and CEO.
"Our solid profitability and strong cash flows demonstrate the
strength of our business model and the satisfaction within our
customer base."
The Company also announced its financial outlook for the third
quarter of fiscal 2006. Third quarter total revenues on a GAAP basis
are expected to be in the range of $60 million to $61 million and
non-GAAP net income per fully diluted share is expected to be between
$0.32 and $0.33. GAAP net income per fully diluted share is expected
to be between $0.18 and $0.19.
Second Quarter Highlights
-- Announced powerful new process capabilities in the world's
most popular suite for team-based application development.
Serena Professional 9 increases visibility and control over
the development process and offers enhanced support for
regulatory compliance.
-- Announced that Serena was named to the SD Times 100 for third
consecutive year. Serena was recognized for the successful
Merant acquisition, propelling the company to a leadership
position in managing change across IT.
-- Announced that Serena RTM was named the top requirements
management solution by Yphise. According to Yphise, Serena RTM
proved the best requirements management product overall for
lowering the cost of application maintenance.
-- Launched Serena ProcessView software to visualize and
prototype business applications, enabling business users and
IT to collaborate for faster, more accurate development.
-- Eclipse Foundation and Serena Software announced the approval
of the Eclipse Application Lifecycle Framework project, a new
Eclipse project proposed by Serena to offer developers an open
platform for application lifecycle management.
-- Demonstrated ProcessView Composer integration with the
Microsoft Visual Studio Team System at TechEd 2005 in Orlando,
Florida June 5-10, 2005, showing how it enables business users
to rapidly visualize application requirements while
integrating with VSTS to collaborate more effectively with IT
architects, developers and testers.
-- Announced a new single site offering of Serena Collage,
focused on the SMB market, making web content management
affordable to organizations of any size.
GAAP to non-GAAP Reconciliation
Serena management evaluates and makes operating decisions using
various operating measures. These measures are generally based on the
revenues of its product, maintenance and services operations and
certain costs of these operations, such as cost of revenues, research
and development, sales and marketing and general and administrative
expenses. Such measures include non-GAAP net income and non-GAAP net
income per share. Collectively, we refer to these non-GAAP financial
measures as "non-GAAP measures." We have outlined below the type and
scope of the amounts excluded in calculating these non-GAAP measures
and the limitations on the use of these non-GAAP measures as a result
of these exclusions. These non-GAAP measures are not an alternative to
net income as calculated in accordance with GAAP. Investors and
potential investors in our securities should not rely on the use of
these non-GAAP measures as a substitute for any GAAP financial
measure. In addition, our calculation of these non-GAAP measures may
or may not be consistent with that of other companies. We strongly
urge investors and potential investors to review the reconciliations
to the comparable GAAP financial measures that are included below and
not to rely on any single financial measure to evaluate our business.
Serena views non-GAAP net income and non-GAAP earnings per share
as operating performance measures, and as such it believes that the
GAAP financial measures most directly comparable to them are net
income and net income per share, respectively. Non-GAAP net income and
net income per share differ from comparable GAAP measures in that they
exclude the amortization of intangible assets and charges relating to
the purchase accounting adjustments for the acquisition of Merant,
amortization of acquired technology and intangible assets, stock based
compensation, restructuring, acquisition and other charges.
Management believes it is useful in measuring Serena's operations
to exclude amortization of intangible assets and charges relating to
the purchase accounting adjustments for the acquisition of Merant
because these costs are primarily fixed at the time of the acquisition
and generally cannot be changed by management in the short term, or
represent significant costs not related to current operations.
Non-GAAP net income and non-GAAP earnings per share are helpful in
highlighting trends in its core business that may not otherwise be
apparent when relying solely on GAAP financial measures, because these
non-GAAP measures eliminate from net income financial items that have
less bearing on Serena's operating performance. The Merant acquisition
was a particularly large acquisition in Serena's history, and
management believes the impact of charges relating to the acquisition
can make it more difficult to evaluate the trends of Serena's
underlying business, including the performance of its products,
maintenance and services operations. Serena believes it is useful to
investors to see how management separates initial transaction costs
from its view of Serena's current and future continuing operations.
Management also believes that these non GAAP measures facilitate
comparison of the current operating performance of the combined Serena
and Merant operations to the past performance of Serena and Merant as
separate companies, as it permits the comparison of operating results
of the separate companies, viewed together, to Serena's current
operating results without the impact of charges relating to the
acquisition process rather than the underlying operations of the two
companies.
Serena's management uses these non-GAAP measures as supplemental
financial measures to evaluate the performance of Serena's business
because, when viewed with Serena's GAAP results and the accompanying
reconciliations, it believes they provide a more complete
understanding of factors and trends affecting its business than GAAP
results alone. Serena uses these measures to make forecasting,
budgeting and operating decisions such as establishment of operating
targets, budgets and bonus compensation.
Serena communicates these non-GAAP measures to the public through
its earnings releases because we understand that they are financial
measures commonly used by analysts that cover our industry and our
investor base to evaluate our performance. For example, based on
communications with analysts and investors, Serena understands that
some analysts and investors may value companies based on a measure of
discounted future cash flows and that Serena's non-GAAP financial
measures can be useful to such analysts in performing such valuations.
Management believes that presenting these non-GAAP measures provides
investors and analysts with an additional base line for assessing the
future earnings potential of Serena. Serena prefers to allow investors
to have these supplemental measures since, with reconciliation to
GAAP, they may provide additional insight into its financial results.
Non-GAAP measures should not be considered a substitute for
measures of financial performance prepared in accordance with GAAP.
Investors are encouraged to look at GAAP results as the best measure
of financial performance. For example, amortization of acquired
technology and intangible assets are important to consider because
they may represent initial expenditures that under GAAP are reported
across future fiscal periods. Stock based compensation and
restructuring and acquisition related charges are important because
they may represent obligations of Serena that should be considered.
All of these metrics are important to financial performance generally.
Investors and potential investors are encouraged to review the
reconciliation of non-GAAP financial measures contained within this
press release with their most directly comparable GAAP financial
results.
Though Serena management finds its non-GAAP measures useful in
evaluating the performance of its business, its reliance on these
measures is limited because items excluded from such measures often
have a material effect on its net income and net income per share
calculated in accordance with GAAP. Management compensates for the
above-described limitations of using a non-GAAP measure by using these
non-GAAP measures to supplement Serena's GAAP results to provide a
more complete understanding of the factors and trends affecting our
business.
Commentary Available
A conference call to discuss the preliminary results is scheduled
for 2:00 PM Pacific time today and may be accessed live via the
Internet at www.companyboardroom.com or www.serena.com/Q206results. A
replay of the call will be available through September 1, 2005 by
dialing (800) 642-1687 or (706) 645-9291, ID# 8144874.
About Serena Software, Inc.
Serena Software (NASDAQ: SRNA) is the largest company solely
focused on managing change in the IT environment. Serena's products
and services automate process and control change for teams managing
development, web content, and IT infrastructure. Based on 25 years of
innovation in process and configuration management, Serena's SAFE(TM)
solutions enable customers at more than 15,000 sites worldwide,
including 98 of the Fortune 100, to improve IT governance, mitigate
risks, support regulatory compliance, and boost productivity and
quality. Serena is headquartered in San Mateo, California, with
offices throughout the U.S., Europe, and Asia Pacific. For more
information, please visit www.serena.com.
This press release contains "forward-looking statements" under the
Private Securities Reform Act of 1995. There can be no assurance that
future results will be achieved, and actual results could differ
materially from forecasts and estimates. Factors that could cause or
contribute to such differences include, but are not limited to, the
percentage of license revenue typically closed at the end of each
quarter making estimation of operating results prior to the end of the
quarter extremely uncertain; weak economic conditions worldwide which
may continue to affect the overall demand for software and services,
which has resulted in and could continue to result in decreased
revenues or lower revenue growth rates; our ability to successfully
integrate our acquisition of Merant plc.; changes in revenue mix and
seasonality; dependence on revenues from our installed base; the
expansion of our international organizations; continued demand for
additional mainframe MIPS capacity; our ability to complete the
assessment of internal controls over financial reporting as of January
31, 2006, as required by Section 404 of the Sarbanes-Oxley Act, which
may impact market perception of the reliability of our internal
controls over financial reporting and thus adversely affect the market
price of our common stock; and our ability to manage our growth.
Information about potential factors that could affect the Company's
financial results is included in the Company's Form 10-K filed on
April 8, 2005 and Form 10-Q filed on June 9, 2005. Serena assumes no
obligation to update the forward-looking information contained in this
press release.
Trademarks
Serena, TeamTrack, ChangeMan, Comparex and StarTool are registered
trademarks of Serena Software Inc. SAFE is a trademark of Serena
Software Inc. All other products or company names mentioned are used
for identification purposes only, and may be trademarks of their
respective owners.
(C) 2005 Serena Software, Inc. All Rights Reserved.
SERENA Software, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited GAAP)
Three Months Ended Six Months Ended
July 31, July 31,
----------------- ------------------
2005 2004 2005 2004
-------- -------- -------- ---------
Revenue:
Software licenses $18,821 $19,416 $ 40,999 $ 35,256
Maintenance 34,218 25,732 67,214 40,497
Professional services 6,366 6,812 12,501 9,949
------- ------- -------- ---------
Total revenue 59,405 51,960 120,714 85,702
------- ------- -------- ---------
Cost of revenue:
Software licenses 919 1,025 1,522 1,351
Maintenance 3,267 3,151 6,687 4,714
Professional services 6,113 6,259 11,959 9,048
Amortization of acquired
technology 4,379 3,932 8,546 5,977
Stock-based compensation 7 14 21 15
-------- ------- -------- ---------
Total cost of revenue 14,685 14,381 28,735 21,105
------- ------- -------- ---------
Gross profit 44,720 37,579 91,979 64,597
------- ------- -------- ---------
Operating expenses:
Sales and marketing 16,694 18,131 34,472 27,488
Research and development 8,563 8,875 17,419 13,824
General and administrative 4,233 4,963 8,864 7,011
Stock-based compensation 352 223 567 240
Amortization of intangible
assets 2,582 2,986 5,396 3,936
Acquired in-process research
and development -- -- -- 10,400
Restructuring, acquisition
and other charges -- 1,556 -- 1,766
------- ------- -------- ---------
Total operating expenses 32,424 36,734 66,718 64,665
------- ------- -------- ---------
Operating income (loss) 12,296 845 25,261 (68)
Interest income 1,378 728 2,490 2,043
Interest expense (825) (825) (1,650) (1,650)
Amortization of debt issuance costs (335) (335) (670) (796)
------- ------- -------- ---------
Income (loss) before income
taxes 12,514 413 25,431 (471)
Income taxes 4,029 157 8,809 3,547
------- ------- -------- ---------
Net income (loss) $ 8,485 $ 256 $ 16,622 ($ 4,018)
======= ======= ======== =========
Net income (loss) per share:
Basic $ 0.21 $ 0.01 $ 0.40 ($ 0.10)
======= ======= ======== =========
Diluted $ 0.18 $ 0.01 $ 0.34 ($ 0.10)
======= ======= ======== =========
Weighted average shares used in
per share calculations:
Basic 41,165 43,955 41,445 41,413
======= ======= ======== =========
Diluted 51,758 43,955 52,273 41,413
======= ======= ======== =========
Net income (loss) $ 8,485 $ 256 $ 6,622 ($ 4,018)
After tax adjustment of
convertible related expenses 697 N/A 1,396 N/A
------- ------- -------- ---------
Adjusted net income (loss) for
diluted net income (loss) per
share calculation $ 9,182 $ 256 $ 18,018 ($ 4,018)
======= ======= ======== =========
Serena Software, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited GAAP)
July 31, January 31,
2005 2005
-------- --------
Assets
Current assets
Cash and cash equivalents $ 88,330 $133,330
Restricted cash 3,300 3,300
Short-term investments 43,232 16,778
Accounts receivable, net 29,876 40,988
Deferred taxes 12,267 12,267
Prepaid expenses and other current assets 6,130 4,964
-------- --------
Total current assets 183,135 211,627
Long-term investments 49,228 39,095
Restricted cash, non-current 1,565 3,157
Property and equipment, net 5,765 5,722
Goodwill, net 326,350 323,671
Other intangible assets, net 100,855 107,790
Other assets 3,397 4,057
-------- --------
Total assets $670,295 $695,119
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,948 $ 3,415
Income taxes payable 32,364 27,667
Accrued expenses 20,417 26,103
Accrued interest on subordinated notes 413 413
Deferred revenue 66,972 63,152
-------- --------
Total current liabilities 122,114 120,750
Deferred revenue, net of current portion 12,829 13,110
Long-term liabilities 2,321 2,660
Deferred taxes 38,308 40,983
Subordinated notes 220,000 220,000
-------- --------
Total liabilities 395,572 397,503
Stockholders' equity:
Total stockholders' equity 274,723 297,616
-------- --------
Total liabilities and stockholders'
equity $670,295 $695,119
======== ========
The following table reconciles the GAAP financial measures to
Non-GAAP:
Three Months Ended Six Months Ended
July 31, July 31,
----------------- -------------------
2005 2004 2005 2004
------- ------- ------- ---------
GAAP net income (loss) $ 8,485 $ 256 $16,622 ($ 4,018)
Amortization of acquired
technology, intangible assets
and stock based compensation 7,320 7,155 14,529 10,168
Acquired in-process research
and development -- -- -- 10,400
Revenue impact of deferred
maintenance write-down,
net of tax -- 4,233 953 4,637
Restructuring and acquisition
charges, net of tax -- 964 -- 1,099
-------- -------- -------- ---------
Non-GAAP net income 15,805 12,609 32,104 22,285
Add back:
After tax adjustment of
convertible related expenses 697 694 1,396 1,464
------- ------- ------- ---------
Non-GAAP net income for
purposes of computing
fully diluted EPS $16,502 $13,303 $33,500 $ 23,749
======= ======= ======= =========
Fully diluted shares
outstanding 51,758 54,539 52,273 52,078
======= ======= ======= =========
Non-GAAP net income per fully
diluted share $ 0.32 $ 0.24 $ 0.64 $ 0.46
======= ======= ======= =========
CONTACT: Serena Software, Inc.
Robert I. Pender, Jr., 650-522-6604
or
Citigate Sard Verbinnen
Victoria Hofstad, 212-687-8080